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political stimulus: Is Obama out of touch?

posted by Aziz Poonawalla

Today is the one-year anniversary of the landmark stimulus bill which most economists agree has staved off a second Great Depression. The evidence that the stimulus has worked is overwhelming – the New York Times has an in-depth article looking at its actual impact on jobs, and an indispensable graphic showing a timeline of key economic indicators before and after its passage. There’s another beautiful chart based on job loss data from Dec 2007 to Jan 2010 which also makes the impact of the stimulus crystal clear. The recognition of the stimulus’ success isn’t just data-driven – Republican lawmakers who have publicly denounced it for political gain have been quietly and hypocritically scrambling for stimulus money for their districts – as documented by the Wall Street Journal and by the Washington Times.

The only real flaw in the stimulus bill was that it wasn’t big enough – and in a wasted effort at seeking bipartisan Republican support, included some of the largest tax cuts in the nation’s history (but no Republicans voted for it anyway).

And yet, not only is public opinion largely hardened in the perception that the stimulus is a failure, but Obama himself has suffered a major drop in his approval ratings, even to the point that a majority of respondents in a recent CNN poll felt he didn’t deserve a second term. That anti-incumbent attitude is largely the result of a perception that there hasn’t been enough change, that the new Administration hasn’t made progress on fixing the economy (undeservedly so) or health care (deservedly so).

Why hasn’t Obama been able to make his case for his achievement in his first year? It seems largely due to his reliance on the “Chicago Core” – a tiny coterie of four powerful advisers who see everything in “campaign mode” political calculation rather than “governing mode” policy and communication. The main argument and description of the structural problem is laid out in a massive insider piece by Financial Times bureau chief Edward Luce. It’s far too comprehensive to summarize in a few excerpts, but one anecdote is very illustrative of the problem – “the Obama Campaign goes to China.”

On Mr Obama’s November trip to China, members of the cabinet such as the Nobel prizewinning Stephen Chu, energy secretary, were left cooling their heels while Mr Gibbs, Mr Axelrod and Ms Jarrett were constantly at the president’s side.

The White House complained bitterly about what it saw as unfairly negative media coverage of a trip dubbed Mr Obama’s “G2″ visit to China. But, as journalists were keenly aware, none of Mr Obama’s inner circle had any background in China. “We were about 40 vans down in the motorcade and got barely any time with the president,” says a senior official with extensive knowledge of the region. “It was like the Obama campaign was visiting China.”

Supplemental evidence to the Luce piece is provided by Steve Clemons, who concludes and summarizes:

…one thing essential to understand is that the kind of policy that smart strategists (…) would be putting forward is getting twisted either in the rough-and-tumble of a a team of rivals operation that is not working, or is being distorted by the Chicago political gang’s tactical advice that is seducing Obama towards a course that has not only violated deals he made with those who voted him into office but which is failing to hit any of the major strategic targets by which the administration will be historically measured.

President Obama needs to take stock quickly. Read the Luce piece. Be honest about what is happening. Read Plouffe’s smart book again. Send Rahm Emanuel back to the House in a senior role. Make Valerie Jarrett an important Ambassador. Keep Axelrod — but balance him with someone like Plouffe, and get back to putting good policy before short term politics.

Set up a Team B with diverse political and national security observers like Tom Daschle, John Podesta, Brent Scowcroft, Arianna Huffington, Fareed Zakaria, Katrina vanden Heuvel, John Harris, James Fallows, Chuck Hagel, Strobe Talbott, James Baker, Zbigniew Brzezinski, and others to give you a no-nonsense picture of what is going on.

And take action to fix the dysfunction of your office. Otherwise, the Obama brand will be totally bust in the very near term.

Another of the very few political commentators who have been talking about the Luce piece is Mark Schmitt at The American Prospect, who also offers his own insightful thoughts on the problem, namely that the Obama white house has embraced a “momentum” strategy instead of a patient grinding approach to governing. And Leslie Gelb in The Daily Beast also takes on the core dysfunction, making a solid case for Obama to replace Rahm as chief of staff.

Recall that Obama talked on the campaign trail about how he admired President Lincoln for his “team of rivals” approach to governing. There’s merit in that idea, as long as the team of rivals are interested in governing. Unfortunately, it seems that Obama’s team is more interested in campaigning – and that short-term tactical attitude is going to hurt Obama in the long run. It already has.



  • Derek

    “There’s another beautiful chart based on job loss data from Dec 2007 to Jan 2010 which also makes the impact of the stimulus crystal clear.”
    At the risk of being trite, correlation does not equal causation.
    What the chart shows is that job loss bottomed out the same month President Obama was elected, and then started to improve. But it also improved in the previous December, with out the stimulus funding.
    The stimulus bill was passed in February, and no money from it was spent that month. Yet job loss lessened in February. That the bill was signed into law does not mean it was the cause of improvement.
    In fact, most of the money from the stimulus bill hasn’t even been spent yet. We can’t truly say it was too small because being larger wouldn’t mean that money would be spent any faster. And until it’s all spent, we won’t know if it wasn’t enough.
    What the chart doesn’t note is that by January 2009, TARP was 3 months old. I wonder – did bank stabilization (or at least the promise of it) help keep businesses functioning?
    The stimulus bill was a bad bill that’s become a bad law. It’s full of bad requirements and payouts. It is, in my opinion, its own worst enemy.
    That Republican opponents of the bill are now scrambling for funds doesn’t mean the act was a success. It means that the Republican opponents are politicians and politicians do what they can to get reelected.
    And, yes, I’m cynical.

  • http://wow joseph canouse

    Derek,
    you said it all and your comment was better than the article. start your own blog and thanks for your input. the assumptions in this article for an intelligent person are laughable.

  • Uh-huhh.

    So if I point a gun at you and make you hand me your wallet, and then offer to give you back $5 from it so that you can at least take the subway home, your taking it validates my theft.
    Good to know.

  • whatever

    The other example at Instapundit – the lawmakers who were against the Bush tax cuts sent in extra money at the old tax rates right? And if they didn’t they were hypocrites.
    Actually, it goes for any democrat in the U.S. who was against the “Bush tax cuts”. Taxes are a mimimum, you are free to send in more.

  • Mike

    What Derek said. It is stunning to me that any decent person would say the stimulus bill “worked” and was even too small. It “worked” if long-term degradation of freedom via degradation of the souls of citizens via economic dependency is your goal. The supporters of Obama are, strictly speaking, anti-human. They are the un-progressives who want to stop human flourishing and liberty so that they can control others. When the government confiscates money from earners, and gives it away as political patronage to others that it favors, that money and everything it represents (which is the soul of America) is like blood drained out of a body. It weakens and eventually kills. The idea of throwing good money after bad was never more relevant. America needs to defeat Democrats en masse in November, and then Obama in 2012. He is a one-man wrecking crew of anything good and decent. He is an abomination in his person. America is doomed if it does not repudiate and vilify this monster of a person who happens to be President. He is the single biggest mistake (after slavery) in the History of America. As such his negative impact on the world itself is incalculable. Get rid of the bum and anyone who supports him.

  • TJM

    Citing the New York Times as evidence that the stimulus worked isn’t evidence at all. They are for all intents and purposes a “viewspaper” dedicated to promoting a left-wing view of things.

  • Copper Quark

    You have got to be kidding me. No sane person thinks the stimulus bill was anything other than political payoff for Democrat buddies — crony capitalism at its finest.
    When I read the first paragraph, I really thought this was a parody. And in a way, I guess it is.

  • Nick Reynolds

    Sharia Economics 101.

  • Your Name

    I’m at a loss, Mr. Poonawalla – I hate Social Security and despise the tyrannical government that takes the money from me. Am I a hypocrite if, upon reaching retirement, I try to recover in benefits what’s been taken by force from me?

  • http://ani-nouto.animeblogger.net/ Pete Zaitcev

    Sorry, Aziz, your graphics do not persuade anybody. The Porkulus delayed the economic recovery, and together with other policies of Democrats it created a permanent unemployment. And, the mega-debt will come home to roost.
    Seeing the first two paragraphs filled with 100% untruths, the rest is tl;dr.

  • aj

    I havent read anything so wrong about a single subject in quite a while.
    Im not sure whether to laugh or cry. That anyone would consider publishing this article under their own name is amazing.
    The Stimulus did absolutely nothing but leave a giant debt for our children to pay so Obama could repay some big contributors and return the favors of some cronies who helped him get elected. A lot of the money went to nonexistent districts, a bunch more was psuedo-earmarks. It was a joke and did nothing to help the economy or citizens of this country. Unless you are a personal friend to the administration, that is….right Andy Stern?
    Wake Up.

  • Your Name

    When God wants to punish you he gives you exactly what you desire.
    What the Democrat party desperately desired was a majority in the House and Senate and a witless communist in the Whitehouse. With these pieces in place they would at last be in a position to inflict their fondest redistributionist fantasies on America.
    Get ready to see what Old Testament punishment looks like because it is coming like a freight train, and the Democrat party is so caught up in their mad orgy of power that they can’t hear the whistle shrieking.
    Behold, my name is Barack, and I am become death the destroyer of Democrats:)

  • Big Daddy

    I think we found Ellie Light

  • luagha

    You know, it is odd that Obama never drafts legislation.
    Why is that?
    I mean, the White House is perfectly capable and completely allowed to create the first draft of a bill and then provide it to the House or the Senate, wherever it should go. That way they get first shot at what is supposed to be in it, and can make their vision clear.
    And even if Obama personally hasn’t created any bills like that, Rahm Emmanuel certainly has, as have many others in his employ.
    Why aren’t they?

  • Vinny Vidivici

    Mr. Poonawalla:
    I almost always stop to read what you’ve written when I come across it. But I think you’ve vastly overstated the supposed benefits of the stimulus package, especially since we keep hearing that so little of it has actually been spent (in anticipation of election-year ward heeling, no doubt).
    More important, I think you fail to account for the likely longer term fallout of this and other reckless spending (both before and after Obama took office) — inflation or stagflation, a jeopardized credit rating, constriction of our foreign policy options as a result of our debt and who owns that debt, etc.

  • Your Name

    Thanks for the note.
    Despite the continued cheerleading of the two major US dailies, it is a better probability that it is the massive spending of many trillions of USD by the FED to buy up toxics at 100 cents on the dollar and maintenance of the zirp (zero interest rate policy) that have propped up the debt laden asset value inflated capital misallocated US economy. An unspent stimulus most of the proceeds of which went to prop up states and unemployment funds and visual make work projects and related road signs hardly could measure against Mr. Bernanke’s money creation and toxic asset purchases.
    It is not polite to call something a tax cut when the person receiving it (or cash in lieu) is not paying taxes in teh current period to beging with.
    The air will go out. It is just going to take longer and be more grinding.
    Finally, the policies are not any good. That is why they are not successful.

  • Fderfler

    “…which most economists agree ” Goodness isn’t THAT an over-worked phrase. The technique of cutting off discussion by the claim of overwhelming expertise. If you want trite sayings.. how about “If you set all of the economists in the world head to foot they still would never reach a conclusion.”
    But, I will argue that the Stimulus Bill was a stunning success. Just be careful of your criteria. IF you understand that the goal of the Bill was to loot the Treasure of the US and throw it overboard to friends and supporters of the politicians… then it WAS a great success.

  • Stan

    Yeah, I saw the NYT trying to spin the Stim on behalf of Obama – but it doesn’t wash. Repeating endlessly (after trying other approaches – like unemployment won’t go above 8% with the Stim – then it does and here are where all the jobs created are – except those locations and metrics were bogus too) that it “saved or created 2 million jobs” doesn’t make it so except in the mind of a NYT reader…
    I’ve never really read anything by Mr. Poonawalla – but this leads me to conclude that he is not a serious analyst. His core competency is repeating the NYT narrative.

  • Dr. Dean

    Mr. Poonawalla, as of February 8, 2010 $179,303,442 has been spent. If, as you assert, spending that much prevented the next ‘Great Depression’, then how do you explain the $154,121,537 that has not yet been spent but is in the process of being spent and $247,222,421 remaining to be spent? That’s a quarter of a trillion dollars that was *not* needed to prevent us from slipping into a depression.
    So what is that quarter trillion plus supposed to accomplish. My 16 year old son wants to know as he’s going to be paying for it in cash, lost income and depressed lifestyle for most, if not all of, the rest of his life.
    Please explain it to us.

  • Big_Al

    Just a comment on the author’s analysis of the american voter’s frustration.
    If you listen to CNN and the alphabet soup networks they will tell you exactly what he says in this article, however it doesn’t square with reality.
    America in general is “right of center”. Americans in general tend to be complacent, and so often their intent is drowned by liberal activists with megaphones.
    In this case, Obama was never given a mandate to turn the US into a third-world nation by impoverishing it through out of control government growth. We are independent and we don’t need a nanny state to run our lives. That being said, the stimulus (of which only 1/3 has been spent and the remainder is being held as a slush fund for the Democrat 2010 power defense. ) has not stimulated anything outside of pundit’s imaginations. American small business needs stimulation for sure and in response Obama is giving them bigger taxes.
    I suggest the author find out what he is writing about before he opens his mouth and inserts his foot again.

  • Bo

    Mr. Poonawalla, if you’re getting your information about the stimulus bill from the NYT, then you’re sadly misinformed. You might do better to read the Weekly World News or the National Enquirer, which has scooped the NYT on a monthly basis for the last several years. The “jobs created or saved” baloney touted by the administration and echoed by the NYT has been widely debunked over the last year, and if you haven’t read about jobs created in non-existent congressional districts or non-existent zip codes, then I wonder what planet you’ve been living on. The overwhelming majority of “stimulus” funding has gone to state and local governments to bail them out of their deficits. Their day of reckoning has been briefly put off, but it’s coming. But please, don’t let me interrupt what must be a pleasant dream, stay in your echo chamber and believe whatever the NYT is peddling today, it won’t be around for long and the dream will surely end. I look forward to November 2010 when our country finally awakes from what has been a pleasant dream for a few, but is a nightmare for the most of us.

  • Dr. Dean

    Also, I can’t let this pass without comment: “Why hasn’t Obama been able to make his case for his achievement in his first year? It seems largely due to his reliance on the “Chicago Core” – a tiny coterie of four powerful advisers who see everything in “campaign mode” political calculation rather than “governing mode” policy and communication.”
    No, it is not the fault of Obama’s Chicago gang of advisers. They have not helped, but the lion’s share of the blame goes to the policy, not the advisers. Obama certainly has not been overly successful at hiring top-notch people who know how to govern as opposed to campaign – no question about that.
    However, the trillions of bucks stop at Obama – not his advisers. He has a clear propensity to spend unimaginable amounts of money we don’t have – and may never have – and for that he is responsible.
    A rapidly growing number of Americans are awakening to the dangers of Obama’s obscene spending plans. ABC news: “Within 12 years&the largest item in the federal budget will be interest payments on the national debt,” said former U.S. Comptroller General David Walker. “[They are] payments for which we get nothing.”
    That kind of debt is vastly more dangerous to our lives and well being than Global Warming, yet our media ignores the violent impacts such numbers will have on our lives.

  • Greg F

    I would like to know who “most economists” are because they should all be fired for incompetence. I guess “most economists” forgot that the “stimulus” money that the government spends has to come from somewhere. If they take out a loan to finance the “stimulus” then someone has to loan them the money don’t they? Well then the people who loan them the money no longer have it to spend do they? So all the “stimulus” does is change who is spending the money and that is a “stimulus”.
    The other option is the government can print the money. Printing money reduces its value. Money isn’t the wealth. Money is a tool we use for convenience that represents the wealth. Printing money is a way for the government to confiscate part of the wealth without taxing.
    I guess if you use an appeal to authority argument that “most economists” believe this or that then you don’t really have to think about it.

  • Sonar

    “Republican lawmakers who have publicly denounced it for political gain have been quietly and hypocritically scrambling for stimulus money for their districts”
    This is not hypocrisy.
    Once the bill is passed, ALL share its costs, both those who supported it and those who opposed it.
    If you encourage, “Let’s all split the check, that’s fair and civil.” Then you say, “How dare you order dessert? You didn’t support our sharing the cost.” THAT is hypocritical.
    Is that you?

  • Lester

    The unemployment rate is a bogus number. What counts is the number of employed Americans and that number continues to decline.

  • Mike

    Typical. This guy deletes comments that are critical. Animal Farm World.

  • Dave in Houston

    Joseph Goebbels is smiling at this. This is the big lie. Be audacious and don’t blink. But I think he believes it. That is his downfall.
    There is no case to be made for President Obama. He is incompetent, as was pointed out by Jennifer Rubin in Commentary. He is in way over his head. His brilliance in just bafflement.
    Did he stave off a depression? The is no evidence of that. What economists, other than those on the President’s payroll? Can he prove that two million jobs were saved or created? No, because it’s a fiction. Just ask Evan Bayh. It really is a fund to reward his cronies, and that is all too quickly coming to an end.
    The American people have rapidly drawn their conclusions about the President. We know a fake when we see one. He is our 21st Century Henry Hill. The big parade at the end will not save him, just march him out of town.
    If he truly wants to save his presidency, he should do what Warren Harding did to fix an even worse economy, drastically cut spending and then cut taxes. The American Government is not unmanageable. It is a system that is too big and too clumsy and too expensive. By end of this term, the economy will be booming, as it did for Harding. He will have his second term.
    Can Obama change? Not on your life.

  • DGF

    @Sonar:
    >Once the bill is passed, ALL share its costs, both those who
    >supported it and those who opposed it.
    Exactly. Unless people are suggesting that the cost of the stimulus would have been LOWER if these Republicans hadn’t put in a bid for their districts.
    The worst part is that there are people who fall for this nonsense. And judging from the local talk shows, there are a lot of them.
    DGF

  • Walter Sobchak

    I think they are doing a great job. Keep the good work guys.
    /sarc.

  • Your Name

    This guy must be high. The “jobs” created or saved?!?!? are almost entirely gov’t jobs or other jobs that are dependent on public funding which are unsustainable. That’s why Scott Brown is correct when he says the stimulus hasn’t created 1 job, he just forgot the qualifier that isn’t going to end as soon as the stimulus money is spent. This is just running up credit card debt when you’re out of work and it’s going to have the same end result.

  • BR

    Question: How can the stimulus bill have kept us out of a depression when only a fraction of the money has been spent (as of August 09 it was only 12%)? Additionally if it has already kept us out of a depression, why are they still spending money from that bill? Something about the president’s claims don’t add up.

  • Josh Reiter

    The supposed “tax cuts” in the stimulus were actually just an over complex way of making people pay more tax come income tax day. The “Making Work Pay” tax credits did little more than screw up everybody’s exemptions and increase the likelihood that a good percentage of people will have to pay additional taxes. What we need is just a flat tax with just a few sin taxes and we need to eliminate the insanely complicated income tax as we know it.

  • Mike C

    Aziz, ordinarily I can follow your thinking in what you write, but your assessment of the “stimulus” and opinion that “there hasn’t been enough change” left me saying, “Huh?”
    The stimulus was supposed to prevent 9% unemployment. the most optimistic data available indicate that unemployment is now over 10%. Fail.
    And then there’s the deficit. When Obama took office, he could have (a) reduced deficit spending, (b) left the Bush deficits the way they were, or (c) spent money like a drunken sailor and hoped for the best. He chose (c).
    Perhaps these are two reasons why the public perceives the stimulus as a failure? Just a thought.

  • karina_b

    Most likely, the stimulus has helped some and hurt some – like many things the government does. That’s why it’s so easy for people who agree with the stimulus aka Obama supporters to claim it “worked” and those who don’t agree with it to claim it failed. It has really been too soon to tell anything.
    And if it’s working, why don’t they pay back the remaining unspent money to whatever foreign power/financial interest/population they “borrowed” it from in the first place?

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